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Markets

Hong Kong stock exchange, MSCI in pact to introduce China A-shares futures contracts

Hong Kong Exchanges and Clearing said Monday it had signed a license agreement with MSCI Inc. to introduce futures contracts on the MSCI China A index, pending regulatory approval.

HKEX CEO Charles Li said in a news release that the agreement with MSCI will pave the way for the "development of a key risk management tool for international investors" with A-share equity exposure.

Jack Lin, MSCI's Hong Kong-based head of APAC client coverage, said the move should prove "tremendously important," as the growing ranks of global investors with A-shares exposure demand more tools to manage their risks.

In February, MSCI announced plans to boost the portion of China's Shanghai- and Shenzhen-based stock markets included in MSCI's emerging markets benchmark to 20% by November from 5%.

In doing so, MSCI executives explicitly mentioned the need for risk-management tools such as futures as a reform that could pave the way for further inclusion.